Bonds Product Information

Why Choose Euronext Bonds?

Companies are increasingly using bonds to meet their financing needs. In recent years there has been a sharp rise in the popularity of corporate bonds, and the number of issues is rising steadily as investors discover the many possibilities these bonds can offer.

Euronext’s European debt market is large and liquid. By the end of 2009, more than 600 issuers choose to list their debt instruments on one of NYSE Euronext’s regulated markets. There are more than 4,600 issues listed across a wide array of instruments, including more than 1,300 commercial papers and certificates of deposit.

What is a Debt Instrument?

A debt instrument is an obligation that empowers the issuer (borrower) to raise funds by agreeing to repay a lender in accordance with the terms of a contract. While there are many different types of debt instruments, all can be characterized by the following criteria:

  • Face (nominal) value: the amount of money the issuer receives for each security and which must be repaid to the lender at maturity
  • Maturity: the redemption date, which occurs when the instrument is fully amortized
  • Coupon (interest) rate: the interest rate paid to the lender by the issuer
  • Redemption provisions: the conditions setting out how the debt must be repaid, for instance by tranches, by equal installments or in a single payment at maturity

Why Invest in Debt Instruments?

Debt instruments enable markets and participants to easily transfer ownership of debt obligations from one party to another. This transfer increases liquidity and provides creditors a means of trading debt obligations on the market.

  • Income: Debt instruments can provide the investor with pre-determined fixed streams of income
  • Diversification: An equity investor faces the risk of decline in equity markets. Such investors may use debt instruments to offset this risk, given the performance of equities and bonds often have an inverse relationship
  • Protection: Debt instruments that pay a fixed income can help protect investors against economic slowdown or deflation, while inflation-linked debt instruments can help them protect the purchasing power of their investments against inflation
  • Capitalization: Zero-coupon debt instruments allow investors to save money for long-term goals, such as retirement. Structured with a deep discount, such instruments require a small initial investment that is designed to grow over time